CALIFORNIA PROFESSIONAL ENGINEERING, INC. (5)

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13. STATE FUNDS encumbered for PROJECT are available for liquidation only for three (3) years from the beginning of the State Fiscal Year in which the funds were appropriated in the State Budget. STATE FUNDS not liquidated within this period will be reverted unless a Cooperative Work Agreement (CWA) is submitted by LOCAL AGENCY and approved by the California Department of Finance in accordance with Government Code Section 16304. 14. The estimated costs of PROJECT are shown in EXHIBIT A. LOCAL AGENCY may, at its option, award contracts for amounts in excess of said estimates, and final project expenditures may exceed said estimates if sufficient local funds are available to finance the excess. It is understood that the allocation of STATE FUNDS shall not exceed that shown in EXHIBIT A. 15. In the event LOCAL AGENCY'S final costs of PROJECT are less than said estimate by reason of low bid or otherwise, the allocation of STATE FUNDS will be decreased in relationship to the percent funded by STATE as shown in EXHIBIT A. 16. Exhibit C defined as the "Certification of State Funding" template, shall be made a part of, and completed by STATE, prior to execution of this agreement. 17. Upon written demand by STATE, any overpayment to LOCAL AGENCY of amounts invoiced to STATE shalt be returned to STATE. ARTICLE VI - Audits, Third Party Contracting, Records Retention and Reports 1. STATE reserves the right to conduct technical and financial audits of PROJECT work and records when determined to be necessary or appropriate and LOCAL AGENCY agrees, and shall require its contractors and subcontractors to agree, to cooperate with STATE by making all appropriate and relevant PROJECT records available for audit and copying as required by paragraph three (3) of Article VI. 2. LOCAL AGENCY, its contractors and subcontractors shall establish and maintain an accounting system and records that properly accumulate and segregate incurred PROJECT costs and matching funds by line item for the PROJECT. The accounting system of LOCAL AGENCY, its contractors and all subcontractors shall conform to Generally Accepted Accounting Principles; enable the determination of incurred costs at interim points of completion; and provide support for reimbursement payment vouchers or invoices sent to or paid by STATE. 3. For the purpose of determining compliance with Title 21, California Code of Regulations, Chapter 21, section 2500 et seq., when applicable, and other matters connected with the performance and costs of LOCAL AGENCY'S contracts with third parties pursuant to Government Code Section 8546.7, LOCAL AGENCY, LOCAL AGENCY'S contractors and subcontractors, and STATE shall each maintain and make available for inspection and audit all books, documents, papers, accounting records, and other evidence pertaining to the performance of such contracts, including, but not limited